DRI Earnings: Nothing Unlimited Pasta and Breadsticks Can't Solve.

Darden Restaurants reports its fiscal fourth-quarter and full-year results on Thursday before the market opens. DRI 0.00%↑ runs eleven brands across four reporting segments. Olive Garden is the largest, with $5,212.9M in FY25 sales. LongHorn provides the business’s growth story at $3,025.5M. Meanwhile, Fine Dining includes The Capital Grille, Ruth’s Chris, and Eddie V’s, and is DRI 0.00%↑ ‘s smaller, higher-margin segment at $1,304.8M. Brands like Cheddar’s, Yard House, and Chuy’s sit in an Other Businesses segment.

The big picture for DRI 0.00%↑ is that sales growth comes from two places: more customers, or a higher average check, and the relationship between those two is complex.

(Note: this week, our article is accompanied by a full operating model. Use it to model future scenarios, understand how DRI 0.00%↑ really works, and see how deepKPI can automate the most advanced investment analysis available)

First, take Olive Garden. They reported positive same-restaurant sales in every quarter this year, but guest counts have been heading the other way. Traffic ran +2.8% in the first quarter, +1.7% in the second, and then slipped to -0.4% in the third, even though the reported comp held at +3.2%. Last quarter, they relied on pricing and menu mix to prop up sales while traffic slipped. Meanwhile, LongHorn had no such problem. Its comp climbed from +5.5% to +5.9% to +7.2% over the same three quarters, and it did it while earning a record 19.3% restaurant margin, up from 18.4% a year ago.

The most important number Thursday is Olive Garden’s guest count. A positive comp built on slightly negative traffic would show that Olive Garden is continuing to lean on price to keep sales in line, while running the risk of driving customers away faster or more permanently. Their new Uber Direct delivery channel is an attempt to steer around this risk, and attention-grabbing management commentary on that channel may reflect inherent worry about damage being done to foot traffic.

LongHorn is the second thing to watch, mostly because it can’t keep lapping itself. What’s being tested is how much of Darden’s growth can safely come down to a single brand. If LongHorn keeps accelerating, it suggests that Darden’s scale and buying power can take an ordinary steakhouse and compound it for years, which is supports the argument for owning eleven brands under one roof and continuing to buy more.

Fine Dining is easy to skip over but is worth a closer look. Segment profit there fell to $174.1M over the first nine months from $179.6M a year earlier, even though segment sales grew. If fourth-quarter profit is down year over year again, two quarters of falling fine-dining profit would mandate a closer look at operational dynamics. For example, are high-end diners pulling back as steak costs go up? How would those effects be expected to impact Longhorn, given the importance of growth in that segment?

Two technical points will shape how the headline looks. First, FY26 has an extra 53rd week, and it lands in the fourth quarter, so reported sales and EPS will look inflated against a normal comparison. Management has said that week is worth roughly 2% of full-year sales growth and about $0.25 of adjusted EPS. Second, Darden is winding down Bahama Breeze, closing or converting all 28 locations. It’s a small brand, but a related closing or impairment charge could complicate the move from GAAP to adjusted earnings.

Consensus sits at about $3.64 in adjusted EPS and $3.73B in revenue for the quarter. Darden’s updated full-year guidance calls for adjusted EPS of $10.57 to $10.67, including that $0.25 from the extra week, with same-restaurant sales growth around 4% and capital spending of $750 to $775 M. Citi recently raised its target to $245 with a Buy, and the analyst median is near $225.

Just bring unlimited pasta and breadsticks back, foot-traffic problems solved.

All data sourced via #deepKPI from Darden’s latest 10-Q, 10-K, and quarterly 8-K press releases, with consensus and price-target context from analyst reporting.